<PAGE> 1
1
Tax-Exempt California Money Market Fund
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DEAR SHAREHOLDER:
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We appreciate your decision to invest in the Tax-Exempt California Money Market
Fund. To provide you with an update of the fund portfolio's performance, on the
following pages you'll find the fund's semiannual report for the six-month
period ended March 31, 1999.
Briefly, for the past six months the fund's portfolio registered solid
performance and achieved its objective of providing maximum current income that
is exempt from Federal and State of California income taxes while maintaining
the stability of principal.
ECONOMIC REVIEW AND OUTLOOK
The U.S. economy continued to grow, as low inflation and low unemployment
figures boosted consumer confidence. Meanwhile, the international uncertainty
that caused the Federal Reserve Board to ease interest rates three times in late
1998 appears to have subsided, as Europe, Asia and Brazil showed signs of
rebounding. These factors have helped build the expectation that the Gross
Domestic Product should remain strong with at least 3% growth in both the first
and second quarters of 1999. Despite this encouraging news, the Fed maintained a
"wait and see" approach with regard to tightening interest rates as 1999 began
to unfold.
Considering this information, we plan to take a relatively neutral approach to
the Tax-Exempt California Money Market Fund's average maturity, although we will
look for attractive opportunities to extend maturities, and enhance performance.
Rest assured that the fund's management is dedicated to achieving the fund's
objective. Given the conditions stated above and our strategy, the Tax-Exempt
California Money Market Fund should offer attractive yield potential with a high
degree of stability, and continue to be an excellent place for you to invest
your money.
Thank you again for your investment in the Tax-Exempt California Money Market
Fund. We look forward to serving your investment needs for years to come.
FRANK J. RACHWALSKI
Frank J. Rachwalski
Vice President and Lead Portfolio Manager
May 17, 1999
Frank Rachwalski is a Managing Director of Scudder Kemper Investments, Inc. and
is Vice President and Lead Portfolio Manager of Tax-Exempt California Money
Market Fund. Mr. Rachwalski holds B.B.A. and M.B.A. degrees from Loyola
University.
FUND RESULTS
For the six-month period ended March 31, 1999
Net Annualized Yield 2.04%
Equivalent Taxable Yield 3.57%
NOTES
The fund's net yield is the sum of the daily dividend rates for the period, then
annualized. Yields are historical, may fluctuate, and do not guarantee future
performance.
The equivalent taxable yield allows you to compare the fund with the performance
of taxable money market funds. It is based upon the fund's yield and a combined
Federal and State of California marginal income tax rate of 42.9%. Income may be
subject to local taxes and for some investors, the alternative minimum tax.
Like all money market funds, an investment in this fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve your investment at $1.00 per share,
it is possible to lose money.
The views expressed in this report reflect those of the portfolio manager only
through the end of the period stated above. The manager's views are subject to
change at any time, based on market and other conditions.
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2
Tax-Exempt California Money Market Fund
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PORTFOLIO OF INVESTMENTS
March 31, 1999 (unaudited)
(Value in thousands)
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<TABLE>
<CAPTION>
Value
(A)VARIABLE RATE DEMAND SECURITIES
<S> <C>
State of California
Eastern Municipal Water District
2.70% $ 5,000
Economic Development Financing Authority
2.75% 1,300
Health Facilities Financing Authority
Catholic Healthcare Revenue
2.70% 7,500
Scripps Memorial Hospital
2.95% 3,500
Sutter Health Revenue
2.70% 3,800
Pollution Control Financing Authority
Occidental Geothermal, Inc. Project
2.80% 1,400
Pacific Gas and Electric Co.
3.15% 9,900
Pollution Control Revenue
3.20% 11,900
Solid Waste Disposal
2.80% 5,000
Southern California Public Power Authority
2.75% 6,800
Statewide Communities Development Authority
Leveche LLC Project
3.90% 3,835
- -----------------------------------------------------------
Alameda-Contra Costa
Schools Financing Authority
2.55% 1,770
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Alhambra
Multifamily Housing Revenue
4.20% 2,200
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Anaheim
Public Improvement Corp.
2.70% 1,300
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Berkeley
YMCA of Berkeley
2.75% 2,000
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Chula Vista
Multifamily Housing Revenue
2.70% 2,000
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Hayward
Multifamily Housing Revenue
2.80% 2,000
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</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
Irvine
Assessment District
Improvement Bonds
2.65% $ 5,200
Limited Obligation Improvement Bonds
3.00% 9,000
Ranch Water District
3.00% 13,900
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Kern County
Public Facilities Project
2.70% 800
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Los Angeles County
Community Development Commission
2.70% 1,000
Industrial Development Authority
2.80% 1,500
Multifamily Housing Revenue
2.80% 6,565
Pension Obligation Bonds
2.70% 8,000
Transportation Commission
2.70% 3,700
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Oakland County
Financing Authority Lease Revenue
2.67% 7,100
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Orange County
Foothill/Eastern Transportation Corridor Agency
2.70% 5,200
Improvement Bonds
3.00% 12,300
Sanitation Districts
3.00% 10,100
Water District
2.95% 1,800
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Riverside County
Public Facilities Project
2.70% 1,300
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Roseville
Hospital Lease Revenue
2.75% 4,000
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Sacramento County
Administrative Center & Courthouse Project
2.50% 2,400
Multifamily Housing Revenue
2.65% 1,750
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</TABLE>
<PAGE> 3
3
Tax-Exempt California Money Market Fund
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<TABLE>
<CAPTION>
Value
<S> <C>
San Bernardino County
Medical Center Financing Project
2.75% $ 10,000
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San Jose
Multifamily Housing Revenue
2.95% 4,000
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San Marcos
Multifamily Housing Revenue
2.80% 6,900
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Santa Ana
School District
2.70% 1,400
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Santa Clara County
Electric Revenue
2.70% 2,200
Hospital Facilities Authority
2.65% 3,200
Multifamily Housing Revenue
2.70% 2,200
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Simi Valley
Multifamily Housing Revenue
2.65% 4,000
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Vallejo
Industrial Development Authority
2.85% 2,900
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Ventura County
Triunfo Sanitation District
2.95% 2,190
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Woodland
Multifamily Mortgage Revenue
2.65% 4,720
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Puerto Rico
Government Development Bank
2.75% 1,300
Highway and Transportation Authority
2.65% 2,800
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TOTAL VARIABLE RATE DEMAND
SECURITIES -- 75.5%
(average maturity: 5 days) 214,630
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Value
<S> <C>
OTHER SECURITIES
State of California
General Obligation
2.50%-2.90%, 5/11/99-5/14/99 $ 12,000
Metropolitan Water Authority
2.55%-2.85%, 5/14/99-7/19/99 8,000
Pollution Control Financing Authority
2.80%-2.85%, 7/20/99 3,500
Public Capital Improvements Financing Authority
2.95%, 6/15/99 1,500
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Los Angeles County
Capital Asset Lease Corp.
2.50%-2.90%, 5/11/99-6/10/99 6,500
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Orange County
Local Transportation Authority
2.90%, 4/8/99 5,000
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Sacramento County
Municipal Utility District
2.85%, 7/19/99-7/22/99 13,900
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San Francisco
Airport
2.50%-2.65%, 4/7/99-4/14/99 7,265
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Guam
Power Authority
2.45%-2.90%, 4/14/99-4/15/99 5,800
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Puerto Rico
General Obligation
3.09%, 7/1/99 2,213
Government Development Bank
2.55%, 5/12/99 3,308
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TOTAL OTHER SECURITIES--24.2%
(average maturity: 57 days) 68,986
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TOTAL INVESTMENTS--99.7%
(average maturity: 18 days) 283,616
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CASH AND OTHER ASSETS,
LESS LIABILITIES--.3% 833
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NET ASSETS--100% $284,449
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</TABLE>
<PAGE> 4
4
Tax-Exempt California Money Market Fund
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NOTES TO PORTFOLIO OF INVESTMENTS
Interest rates represent annualized yield to date of maturity, except for
variable rate demand securities described in Note (a). For each security, cost
(for financial reporting and federal income tax purposes) and carrying value are
the same. Likewise, carrying value approximates principal amount.
(a) Variable rate demand securities are payable within five business days and
are backed by credit support agreements from banks or insurance
institutions. The rates shown are the current rates at March 31, 1999.
See accompanying Notes to Financial Statements.
<PAGE> 5
5
Tax-Exempt California Money Market Fund
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<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES STATEMENT OF OPERATIONS
March 31, 1999 (unaudited) Six months ended March 31, 1999 (unaudited)
(in thousands) (in thousands)
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
ASSETS
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Investments, at amortized cost $283,616
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Cash 394
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Interest receivable 783
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Total assets 284,793
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LIABILITIES AND NET ASSETS
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Payable for:
Dividends 17
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Management fee 71
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Distribution services fee 95
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Custodian and transfer agent fees
and related expenses 40
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Trustees' fees and other 121
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Total liabilities 344
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Net assets applicable to
shares outstanding $284,449
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THE PRICING OF SHARES
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Shares outstanding 284,449
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Net asset value and
redemption price per share $1.00
- ----------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
<TABLE>
<S> <C>
INTEREST INCOME $3,095
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EXPENSES:
Management fee 267
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Distribution services fee 360
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Custodian and transfer agent
fees and related expenses 123
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Professional fees 11
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Reports to shareholders 46
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Registration fees 13
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Trustees' fees and other 42
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Total expenses 862
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Net investment income $2,233
- ----------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Six months ended
March 31, Year ended
1999 September 30,
(unaudited) 1998
---------------- -------------
<S> <C> <C>
OPERATIONS, DIVIDENDS AND
CAPITAL SHARE ACTIVITY
Net investment income $ 2,233 $ 3,745
- ------------------------------------------------------------
Dividends to shareholders
from net investment income (2,233) (3,745)
- ------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
(DOLLAR AMOUNTS AND NUMBER
OF SHARES ARE THE SAME):
Shares sold 798,834 807,819
- ------------------------------------------------------------
Shares issued in
reinvestment
of dividends 2,215 3,616
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801,049 811,435
Shares redeemed (681,537) (763,930)
- ------------------------------------------------------------
Net increase from capital
share transactions and
total increase in net
assets 119,512 47,505
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NET ASSETS:
Beginning of period 164,937 117,432
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End of period $ 284,449 164,937
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</TABLE>
<PAGE> 6
6
Tax-Exempt California Money Market Fund
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NOTES TO FINANCIAL STATEMENTS
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1. DESCRIPTION OF THE FUND
Tax-Exempt California Money Market Fund is an open-end management investment
company organized as a business trust under the laws of Massachusetts.
2. SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATION
Investments are stated at amortized cost, which approximates market value. In
the event that a deviation of 1/2 of 1% or more exists between the fund's $1.00
per share net asset value, calculated at amortized cost, and the net asset value
calculated by reference to market-based values, or if there is any other
deviation that the Board of Trustees believes would result in a material
dilution to shareholders or purchasers, the Board of Trustees will promptly
consider what action should be initiated.
INVESTMENT TRANSACTIONS AND INTEREST INCOME
Investment transactions are accounted for on the trade date. Interest income is
recorded on the accrual basis and includes amortization of premium on
investments.
FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Fund shares are sold and redeemed on a continuous basis at net asset value. On
each day that the New York Stock Exchange is open for trading, the fund
determines its net asset value per share at 11:00 a.m., 3:00 p.m. and 8:00 p.m.
Chicago time by dividing the total value of the fund's investments and other
assets, less liabilities, by the number of fund shares outstanding. The fund
declares a daily dividend, equal to its net investment income for that day,
payable monthly. Net investment income consists of all interest income, plus
(minus) all realized gains (losses) on portfolio securities, minus all expenses
of the fund.
FEDERAL INCOME TAXES
The fund's policy is to comply with the requirements of the Internal Revenue
Code, as amended, which are applicable to regulated investment companies, and to
distribute all of its income to its shareholders. Accordingly, the fund paid no
federal income taxes and no federal income tax provision was required.
3. TRANSACTIONS WITH AFFILIATES
MANAGEMENT AGREEMENT
The fund has a management agreement with Scudder Kemper Investments, Inc.
(Scudder Kemper) and pays a monthly investment management fee of 1/12 of the
annual rate of .22% of the first $500 million of average daily net assets
declining to .15% of average daily net assets in excess of $3 billion. During
the six months ended March 31, 1999, the fund incurred a management fee of
$267,000.
DISTRIBUTION AGREEMENT
The fund has an administration, shareholder services and distribution agreement
with Kemper Distributors, Inc. (KDI). For distribution services, the fund pays
KDI an annual fee of .33% of average daily net assets of the fund. KDI has
related service agreements with various firms to provide cash management and
other services for fund shareholders. Under these agreements, KDI pays such
firms at an annual rate ranging from .15% to .33% of the average daily net
assets of those accounts that they maintain and service. During the six months
ended March 31, 1999, the fund incurred a distribution services fee of $360,000.
<PAGE> 7
7
Tax-Exempt California Money Market Fund
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SHAREHOLDER SERVICES AGREEMENT
Pursuant to a services agreement with the fund's transfer agent, Kemper Service
Company (KSvC) is the shareholder service agent of the fund. Under the
agreement, KSvC received shareholder services fees of $118,000 for the six
months ended March 31, 1999.
OFFICERS AND TRUSTEES
Certain officers or trustees of the fund are also officers or directors of
Scudder Kemper. During the six months ended March 31, 1999, the fund made no
payments to its officers and incurred trustees' fees of $11,000 to independent
trustees.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months
ended
March 31, Year ended September 30,
1999 ----------------------------------------
(unaudited) 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------------
Net investment income .01 .03 .03 .03 .03
- --------------------------------------------------------------------------------------------------------------------
Less dividends declared .01 .03 .03 .03 .03
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 1.00 1.00 1.00 1.00
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (NOT ANNUALIZED) 1.02% 2.71 2.91 2.93 3.23
- --------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED)
Expenses .78% .74 .78 .72 .75
- --------------------------------------------------------------------------------------------------------------------
Net investment income 2.02% 2.66 2.78 2.88 3.16
- --------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets at end of period (in thousands) $284,449 164,937 117,432 118,884 105,292
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 8
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Tax-Exempt California Money Market Fund
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SPECIAL SHAREHOLDERS' MEETING
On December 17, 1998, a special shareholders' meeting was held. Tax-Exempt
California Money Market Fund shareholders were asked to vote on two separate
issues: approval of the new Investment Management Agreement between the fund and
Scudder Kemper Investments, Inc. and approval to modify or eliminate certain
policies and to eliminate the shareholder approval requirements as to certain
other matters. The second proposal (Proposal #2) did not receive sufficient
votes to approve the proposed changes and the meeting was adjourned. When the
meeting reconvened on January 25, 1999, Proposal #2 did not pass. The following
are the results.
1.) APPROVAL OF THE NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE FUND AND
SCUDDER KEMPER INVESTMENTS, INC. THIS ITEM WAS APPROVED.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
---------------------------------
<S> <C> <C>
144,029,182 1,993,924 1,551,714
</TABLE>
2.) TO MODIFY OR ELIMINATE CERTAIN POLICIES AND TO ELIMINATE THE SHAREHOLDER
APPROVAL REQUIREMENT AS TO CERTAIN OTHER MATTERS. THERE WAS AN INSUFFICIENT
NUMBER OF VOTES FOR EACH ITEM. THESE ITEMS WERE NOT APPROVED.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
---------------------------------
<S> <C> <C>
INVESTMENT OBJECTIVES
30,899,797 4,661,177 3,564,563
INVESTMENT POLICIES
30,989,668 4,571,306 3,564,563
DIVERSIFICATION
31,001,834 4,559,141 3,564,563
BORROWING
30,805,757 4,755,218 3,564,563
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
---------------------------------
<S> <C> <C>
SENIOR SECURITIES
31,044,342 4,516,633 3,564,563
CONCENTRATION
31,017,433 4,543,541 3,564,563
UNDERWRITING OF SECURITIES
31,016,801 4,544,174 3,564,563
INVESTMENT IN REAL ESTATE
30,728,785 4,832,190 3,564,563
PURCHASE OF COMMODITIES
30,731,460 4,829,515 3,564,563
LENDING
30,885,314 4,675,661 3,564,563
MARGIN PURCHASES AND SHORT SALES
30,567,561 4,993,414 3,564,563
PURCHASES OF SECURITIES OF
RELATED ISSUERS
30,949,151 4,611,824 3,564,563
PLEDGING OF ASSETS
30,640,322 4,920,653 3,564,563
RESTRICTED AND ILLIQUID
SECURITIES
30,975,426 4,585,549 3,564,563
PURCHASES OF SECURITIES
31,045,572 4,515,402 3,564,563
PURCHASES OF PUTS AND CALLS
31,040,124 4,520,851 3,564,563
INVESTMENT FOR THE PURPOSE OF
EXERCISING CONTROL OR MANAGEMENT
30,917,770 4,643,205 3,564,563
</TABLE>
<PAGE> 9
9
Tax-Exempt California Money Market Fund
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<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
---------------------------------
<S> <C> <C>
INVESTMENT IN MINERAL EXPLORATION
30,703,693 4,857,282 3,564,563
INVESTMENT IN ISSUERS WITH SHORT
HISTORIES
31,011,499 4,549,476 3,564,563
INVESTMENT IN OTHER INVESTMENT
COMPANIES
31,004,612 4,556,363 3,564,563
INVESTMENT IN NON-US GOVERNMENT
SECURITIES
31,038,916 4,522,058 3,564,563
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
---------------------------------
<S> <C> <C>
INVESTMENT OTHER THAN IN
ACCORDANCE WITH OBJECTIVE AND
POLICIES
30,889,267 4,671,708 3,564,563
INVESTMENT IN MUNICIPAL
SECURITIES
30,986,254 4,574,721 3,564,563
</TABLE>
<PAGE> 10
Tax-Exempt
California
Money Market
Fund
Semiannual
Report
March 31, 1999
PRINCIPAL UNDERWRITER:
KEMPER DISTRIBUTORS, INC.
222 S. Riverside Plaza, Chicago, IL 60606
This report is not to be distributed unless preceded
or accompanied by a Tax-Exempt California Money
Market Fund prospectus.
507626
TEC-3 1076570 6/1/99 [LOGO]printed on recycled paper
